"Progressive equity integration" restructuring was questioned
Following the restructuring of five private steel companies by Hebei Iron and Steel (3.93, -0.04, -1.01%) in early November, the restructuring of Hebei Iron and Steel Group was accelerating in December.

“At present, five private enterprises such as Hebei Jingye, Tangshan Songjiang, Xingtai Longhai, Yongyang Iron and Steel, Jitai Special Steel have become new members of Hebei Iron and Steel Group, adding 10 million tons of crude steel capacity. In the next few months. There are also a number of such enterprises that want to enter Hebei Iron and Steel Group.” Yan Xiujun, general manager of Hebei Iron and Steel Group Sales Corporation, revealed at the Lange Steel Network 2010 meeting held from December 10th to 12th.

The China Economic Times reporter observed at the site of the Lange Annual Meeting that some of the heads of private steel enterprises took the initiative to conduct intentional negotiations with relevant parties of Hebei Iron and Steel Group after the speech by General Manager Yan Xiujun.

“The way of this restructuring is still to adopt a more feasible 'gradual equity integration' model.” Yan Xiujun, general manager of Hebei Iron and Steel Group Sales Corporation, told this reporter.

As early as the beginning of November, Hebei Iron and Steel Group signed a joint restructuring agreement with the above five private steel companies under the “gradual equity integration” restructuring model. According to the cooperation agreement, Hebei Iron and Steel Group will invest in the above five private steel enterprises by means of goodwill, management, technical consulting services, purchase and sales channels and other resources.

"Any kind of win-win thinking is difficult to achieve sustainable development. Only by persisting in cooperation, mutual support, balancing and creating interests can we cope with market shocks." Yan Xiujun said.

“Is the private steel mill “married” or “big money”? This is the key to the problem.” A steel mill official from Tangshan who did not want to be named told the reporter. In the eyes of the person in charge of the steel mill, "Our private steel mills want to 'marry people', not for 'big money'. If Hebei Iron and Steel in the process of restructuring private steel mills, there is no gold, only goodwill, Resources such as management and technical consulting services are not really reorganized."

Some insiders also pointed out that if Hebei Iron and Steel only had the name of reorganization in the process of reorganization, there would be no gold. The result was only a loose combination between steel companies, and it was not a real restructuring like Angang Steel's restructuring of Pangang.

Whether reorganization can produce synergistic effects remains to be seen
A steel analyst who did not want to be named pointed out that the restructuring can effectively evade the government's macro control over the excess capacity of the steel industry. After the reorganization, the local governments where these private steel mills are located no longer have to worry about the capacity of the steel mills being cut.

More industry insiders are optimistic about the restructuring effect. Great Wall Securities steel industry analyst Qiao Peitao pointed out in an interview with China Economic Times reporter that "the impact of energy-saving emission reduction, power cuts and other factors, private steel mills are very difficult to survive, in this way Under the grim situation, it is not realistic to kill a small steel mill. Therefore, cooperation between private steel mills and large enterprises such as Hebei Iron and Steel Group is also a win-win situation."

Yan Xiujun also pointed out that restructuring can broaden the scope of cooperation with downstream industries and develop the industrial chain business model of direct supply direct sales, thereby establishing long-term stable sales channels and jointly resisting market risks.

Qiao Peitao believes that the steel industry is the main industry in Hebei Province. The existing private steel enterprises in Hebei Province account for more than 60% of the province's total steel production capacity. Through the reorganization of steel enterprises, the overall economic benefits of Hebei Province can be effectively improved, and it is also a method for Hebei Iron and Steel Group to compete with steel companies such as Baosteel.

The reporters who contacted the private steel mills of the conference mostly believed that it was a good thing for Hebei Iron and Steel Group to reorganize private steel enterprises in the province, and whether the synergy effect of resource integration between steel mills after restructuring would remain to be seen.

Qiao Peitao said that after the reorganization, the synergy effect of resources must be brought into play. If there is no interweaving of resources such as management, purchase and sales channels, then the reorganization has not really merged.

Regarding the recent number of private steel enterprises to be reorganized in Hebei Iron and Steel, Yan Xiujun told this reporter that "the specific work of this restructuring has not yet been officially carried out, so the number of restructuring is still difficult to determine, but the development model and final results of the restructuring are worthy of attention."

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